The End of Outbound Calling and the New Customer Experience Era in Collections

Reg F set some companies back on their heels, but not Firstsource. 

Since 2017, Firstsource has been operating using a customer-centric, digital-first collections methodology and they aren’t stopping any time soon. 

In this candid, ranging Q&A with iA Strategy & Tech, Firstsource President of Global Collections Arjun Mitra reflects on why outbound calling is no longer viable as the primary customer outreach strategy, how regulations like Reg F have given companies the green-light to modernize collections, and why increasing recoveries now depends on an optimized digital recovery / collections strategy and elevating the customer experience.

Q: How have you evaluated and prioritized your approach to innovation since the announcement and implementation of Regulation F?

A: Firstsource had already launched a digital platform and solution, which provides consumers with a more convenient and less intrusive way to take care of their debt by presenting options to self-serve on the website. This was ahead of the implementation of Reg F, which with the 7-in-7 and 7-in-1 call restrictions, really reduces the ability to reach consumers. Firstsource deploys an omnichannel approach to better engage consumers via website, email, phone, webchat, SMS. Regulation F has limited the ability to engage with consumers through SMS which is a common communication preference in today’s environment.

We’ve enhanced features on our website providing a more intuitive, comprehensive tool for consumers to have more autonomy and providing customized options tailored for their account. The focus is to move most engagements to digital, not only due to Reg F and state regulations limiting the ability to reach consumers, but technology has become more advanced and will continue to drive communications in the future. 

Q: What does your technology roadmap look like for the next 12-24 months? Why have you decided to go in that direction?  

A: Any technology innovation that we drive at Firstsource is laser focused on two key elements: improving recovery for our clients and elevating the customer experience. 

For our clients – we are working on providing in-app support. This includes simplifying onboarding, enabling custom branding, and integrating additional payment methods. We are also expanding compliant technology support to the UK market, helping companies in other geographies take advantage of digital collections.  

For end customers – we are working on elevating the user experience, from enabling in-email chat to providing one-click pay, so they can take control of their finances and enjoy a hassle-free experience. 

Customer expectations have undergone a dramatic shift over the past few years. Customers no longer answer their phones – 94% of unknown calls went unanswered in 2020.

Q: What is the number one feature your clients are asking for?

A: Without a question, it’s digital. Customer expectations have undergone a dramatic shift over the past few years. Customers no longer answer their phones – 94% of unknown calls went unanswered in 2020. They increasingly prefer to communicate and act through digital channels. At the same time, they expect to be treated with dignity and respect. Traditional collections models that rely on outbound calling are not only intrusive but also out of touch with this reality.  

Our clients understand that designing a sensitive multi-channel contact strategy that customizes communication and payment solutions to individual customers is key to success. Such a strategy requires integrated capabilities and seamless deployment across infrastructure and technologies, including automation, advanced analytics, AI and machine learning. When done right, a digital-first collections strategy offers a path to value creation – it increases returns manifold in terms of efficient and effective recovery and happier customers.  

Q: If a company can only invest in one area of consumer-facing technology, what should that area be? Why?  

A:Self-service through omnichannel outreach – this is where the demand is.  

Debt is a stressful and embarrassing issue for people at the best of times. Traditional collections models make this experience worse. Self-service allows customers to discreetly engage with lenders when and where convenient to them. What’s more, customers can design their own payment plans based on their changing financial situation. Flexible customer journeys and better customer experience translates to deeper customer engagement and better response rates, in turn improving recovery.  

The collections industry needs to embrace the changing behavior patterns and move away from the traditional modes of business. Self-serve platform offers a convenient, individualized and dynamic way to engage with customers and collect better.  

Q: Regulation F makes it clear that consumers are in the driver's seat. Do you see any risks or limitations in following a process of innovation centered around listening to consumers?  

A: Absolutely not, regulations have been long overdue.

Consumers don’t always know they have options to resolve their debt. Limiting the frequency and methods in which to engage with a consumer affects the ability to find out the consumer’s situation and to create the best path for them individually. It also provides the consumer the ability to provide their communication preference or to explain their dispute or inform of a hardship. Otherwise, if contact is not made the consumer’s account may lead to legal action taken by the creditor which could have been avoided if discussions took place earlier.

Consumers may also encourage regulators to create unintentionally complex and difficult processes for all companies to comply with. For example, the Model B-1 initial demand letter. Smaller clients have not been able to extract the data needed to populate the required details for the initial demand letter. It seems like it should be easy but many have multiple in-house systems, some are very old and do not have the flexibility or technology needed to automatically extract the data. This is just one example.

Regulation F gives the green-light to digital collections organizations to modernize their outreach initiatives – enabling them to reach consumers through additional channels like email, phone, text messaging and social media – depending on what works best for the individual customer. This is a huge step towards innovative engagement.

Our focus on innovation is to provide solutions for customers in a setting that best suits them. In fact, we have always centered our product development innovation around driving compliant, empathetic collections – placing customers and their requirements at the core of our solutions. Our digital-first collections solution constantly listens to and responds to the evolving needs of customers. Our goal is to offer positive consumer experiences using digital technologies and tools, making it easier for customers to take control of their finances and fulfill their obligations.

Q: Describe one missed opportunity for innovation that you’ve faced. When did you know it was a missed opportunity, and how did you deal with it? 

A: Machine Learning holds a lot of promise. As consumer preferences evolve in today’s fast-paced world, Machine Learning can help drive flexibility and personalization in the debt collection process. It can turn it into a positive and painless experience – from recovery prioritization to strategy simulation to improved efficiency. We are still working on perfecting our innovation in this area to provide meaningful gains to our clients as well as their end customers. We are going back to the drawing board and redesigning our tools to make our offerings truly data-led with digital, analytics and ML embedded into it. While Machine Learning offers many benefits, we want to remain cognizant of the fact that the human element is still important in collections. Achieving the right balance between Machine Learning and the human touch is key. 

Q: What’s the most innovative decision your company has made? Tell the story behind it.

A: In 2017, we were breaking our heads over the traditional form of collections. We seemed to be constantly juggling multiple elements – editing strategies, competing in a tough, mature industry, struggling with talent attraction and retention, navigating compliance and regulations. I remember thinking, “there has to be a different way, a better way”.

We were fortuitous to be given an opportunity to build a disruptive white-label digital collections product from scratch. It got our creative juices in overdrive and the next 16 weeks were amongst the most memorable in our careers. We utilized a customer-centric and digital-first methodology, and were able to launch a non-invasive, fully automated, and intuitive collections product that we believed would define the future of our industry.

Every key metric from customer experience, negotiations, compliance, data reconciliation, and special circumstance management was mapped against process failures. This product allows us to do away with outbound calling altogether, which is a major milestone for the collections experience! 

Q: What current industry problems do you think will require the most innovative solutions?  

A: The number one area is: innovating how we engage with customers – from the way we reach out to them to the way we communicate with them.  

Conditions are ripe – both in terms of technology availability and customer preferences to transition to a digital-first, customer-driven engagement model in collections. To maximize outcomes, it’s important to ask ourselves if we are putting customers front and center. Are we meeting our customers when and where they want? Are we personalizing the engagement? Is the solution flexible enough to evolve in sync with changing customer needs? 

The second area of focus should be: improving digital engagement rates. When done right, we have seen digital-first collections improve engagement rates by 70% while reducing the cost to collect by 80%.

iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking.